Driving Digital Transformation with a Proactive Approach
How important is IT to the business strategy of SBI & how the technology-related accomplishments make SBI a preferred banking institution/ partner?
With the aim of providing useful, nimble & secure solutions to our customers, SBI has been a pioneer among Banks in designing its IT solutions. IT has been at the centre of our Business strategy right from the days when we started implementing the corebanking solution. With digitisation of the financial landscape as well as emergence of digital touchpoints, IT has assumed an even more important role in the changing times.
We have been adapting and implementing technologies to fulfil some of our key strategic objectives. The most important objective, of course is Customer Engagement and Better Customer Experience. Projects like SIVA (State Bank Intelligent Voice Assistant), CHAPDEX (Customer Happiness Index), AI Based Email Segregation System etc. are a few steps in this direction.
The second objective is to improve our risk management capabilities, operational excellence and productivity enhancement. We are embedding technology in our operations in order to improve policies and processes to ensure that we are effective in meeting customer expectations. Simultaneously, use of the latest technology to enhance our risk mitigation process is a key objective.
With the recent COVID-19 epidemic, empowering employees in a different manner has become a major strategic goal not only for us but for organisations at large. The Bank introduced the concept of Work From Home a few years ago. We made additional technological enhancements which helped us in tiding over these unprecedented times.
The fourth objective is to redesign business models and rethink our way of working. Apart from using the latest technology this can be achieved by innovating, in collaboration with partners. We are partnering with Fintechs/startups and actively leveraging emerging technologies like AI, NLP, Blockchain etc. in order to maintain our leadership edge.
How do you see the current landscape from a Cybersecurity point of view?
With more and more digitisation of processes, it has become imperative for organisations to secure their information and data assets. Cyber security has become one of the most important concerns for any financial institution today. In such a scenario it becomes imperative for organisations to protect their information assets, safeguard customer data and ensure a robust and secure platform.
With the increase in digitalisation and ease of banking services, the instances of ransomware attacks and other cybercrimes are increasing exponentially. Technology based Intra- and Inter-bank interconnected systems expose organisations to a high degree of systemic risk. Newer technologies often result in newer threat models & varying threat perceptions. While process innovation is aimed at increasing efficiencies and efficacy of systems and procedures, Banks need to adopt innovation in security processes to safeguard customers’ information & data.
Cyber incidents are increasingly shifting towards targeting of financial institutions instead of end users. Data loss incidents reported globally have unfortunately become commonplace. There is need for continuous enhancement in operational capabilities to be put in place in the area of client data privacy and protection.
Additionally, Banks need to implement adequate technical and organisational controls and identify the practices they have in place and test them to see if they are strong, relevant and effective. Banks need to be compliant and understand what data is acquired, maintained and processed, and the legal basis for it.
Securing IT assets is a key priority for SBI and the Bank’s security framework is aligned to leveraging technology for fraud detection & management. SBIS security practices follow the protocol of IPDRR i.e. Identify, Protect, Detect, Respond & Recover. A GRC (Governance, Risk & Compliance) framework is also in place for monitoring and addressing key risk indicators for IT & Cybersecurity. Asset
management tools, incident analytics, log monitoring, Security Operation Centre are in place for centralised monitoring of security events & incidents for applications, servers and databases.
The thrust now is on proactive security techniques, such as the use of AI, to move from passive monitoring of threats to active neutralising of threats. Analytics and behaviour-based detection to predict, detect and prevent breaches and frauds is extremely important. Using AI for cybersecurity enables understanding of threat patterns to identify new ones. This leads to an overall reduction in time and effort to identify incidents, investigate them and remediate the threats.
How important is trust in SBI’S IT?
Success of an IT initiative depends on the Trust of the stakeholders on Technology. Since IT forms the backbone on which the Bank runs, it is vital that our customers and other stakeholders have full faith in our technological capabilities and our ability to manage them.
What are the challenges and opportunities in adopting newer banking technologies? How has State Bank of India approached the same?
The returns of investing in digital transformation are not immediate and require a considerable gestation period. Many financial services firms which have progressed on their digital journey, struggle to see early financial results. Maintaining the current business and IT capabilities while investing in new technologies and creating new revenue opportunities is a difficult balance.
Incumbents not only need to constantly keep reinventing and innovating but also to put legacy systems in use. In a diverse country like India we need unique solutions such as chatbots in multiple vernacular languages.
In the current age of open banking, Bank’s systems are exposed not only to the customers but also to the partner ecosystem and the device ecosystems, leading to the need to have a robust cybersecurity system in place.
As a Banker to every Indian, SBI aims to use the latest technology to provide best in class products and services to every customer; from the most digitally savvy in the metros to the farmer in a remote corner of the country, from the largest corporate house to the smallest SME. We have designed products and services for this, the aim is to reach out and deliver.
Different levels of technology maturity between the stakeholders is a challenge to overcome. Another challenge is to get all the stakeholders to come on a common platform to exchange information and transact.
Digital banking is facing pressure from both external and internal forces which can broadly be categorised under four main heads: Technology Infrastructure upgradation, rapidly changing ecosystem, customer demands and disintermediation by Fintechs. These challenges are pushing banks to constantly reinvent and modify their digital strategy. Integration of the customerfacing digital offerings with back-end operations and processes are imperative to help ensure the success of a digital strategy.
Non-bank challengers, ranging from large telecommunications companies to small and nimble technology players, are defining the standards for digital banking. Emergence of payment banks, fintechs, micro banks and para banking activities of telcos and retail chains have blurred the line between industries. The newer business models are disrupting the traditional financial ecosystems. Traditional Banks need to reprogram their own systems and procedures to stay relevant in the rapidly changing ecosystem.
Blockchain is one of the buzz words in the financial technology space. What has been the experience of SBI in this sphere?
The blockchain is a digital distributed ledger which has all the information related to the transaction. All this information is time-stamped and hence is easily trackable. Moreover, all the data is encrypted, and thus, it becomes difficult for anyone to change it or alter it. The blockchain has huge potential in financial services and this was recognised by SBI. We have implemented blockchain in Supply Chain Finance (SCF).
Supply Chain Finance application is being used for financing vendors and dealers of Industry Majors (IMS). Dedicated team of subject matter experts, user friendly IT application and customer friendly product helped our bank acquire leadership position in Supply Chain Finance. Today we are catering to more than 500 Industry Majors and 45,000 plus dealers / vendors.
Repayment in SCF for dealers of auto industry should be tracked on the basis of sanctioned credit period or sale of vehicle, whichever comes first. Since the Bank has no visibility on date of actual sale of each vehicle, earlier we were forced to track on the basis of credit period only. Bank took the initiative to start use of blockchain in SCF, which helped us in switching from Invoice based Finance to Vehicle Identification Number (VIN) based finance. Now Bank has visibility on actual sale made by dealers and can implement repayment on the basis of actual sale. Sales based repayment system for automobile dealers will help us to inculcate better credit discipline amongst dealers.
Blockchain in SCF was started with 02 Industry Majors (IM) and 02 dealers of each IMS. We are using open source hyperledger fabric as a blockchain framework to implement blockchain nodes in SCF. There are three stakeholders in this proposition viz. Industry Major (IM), Auto Dealer and the Bank. Blockchain nodes and supportive infra and software’s are maintained in Bank’s environment and we have decided to go with a ‘Private Blockchain Set-up’.
There are numerous other possibilities in use of Blockchain and these are being actively evaluated and worked upon.